revenue audit, unpaid income tax and penalties

[worried_gail]

I am hoping to get some advice for my close friend, her husband of 1 year went from a basic job
in the pre celtic tiger days to earning a significent salary being self employed (just himself no staff) , somehow through the excess of
celtic tiger good times he did not pay any income tax for 9 or 10 years (beyond belief but seemingly true ). now that cetic tiger days are over he is back as a paye employeee .
following an audit he now has a bill from revenue for 90,000 from his self emplyed days ,my friend could just about cope with this in the hope it could be paid via an up front payment of their complete joint savings (approx 25000)and perhaps 350 -400 euro per month over the next 15 years, with the aim of additional payments where possible to accelerate the 15 year timeline to close to 10 if at all possible.
If revenue demand an immediate payment of the 90000 an alternative would be that they get personnel loans and top up their mortgage to somehow gather the 90000 ASAP.

however now it transpires there is also another approx 90000 in interest and penalties.
my friend is beyond distraught with worry and has 2 small babies , the husband has his head in the sand claiming he will sort it.
we understand he will have an appointment with one of 6 firms of solicitors working on behalf of revenue to support the recovery of unpaid tax, interest and penalties through the courts at some point.

does anyone know what happens at these meetings, will revenue appointed solicitor be happy with
potential proposed payment plan for the first 90000, Is there any hope of reducing the second 90000 as the the first 90000 will bring them close to breadline.
would there be any hope they the interest and penalties could be waived.
could it be the case that he now has to meet the revenue appointed solicitor in dublin as he
probably did not shape up and engage with his local tax office sufficiently.? this is my main concern.

I am just looking for any information that might help my friend somehow get her family finances back on track now that the husband has decided to share a few truths about his financial affairs.
she is all for engaging with revenue to try progress the matter.
she had asked him many times if all his finances were in order before they married and he claimed all was in order.... but obviously not.
many thanks
worried_gail

 

[Tomorrow]

Hi there

What a terrible situation for your friend.
I dont think you will find many answers that will help here without more specific details.
I persume your friends husband has an accountant?
What do they say?
Would it be possible for your friend to sit down with the accountant, together with the husband to get a handle on the situation?

They would be able to answer most of your questions.

How Revenue acts at this stage depends on a few things, for example,
the seriousness of the default and how good the communication has been from the taxpayer

Your friends husband would need to have somebody qualified and experienced in these cases acting on his behalf - this is the best advice I can give.


Larissa
www.accountantonline.ie

 

[mark1]

I had a revenue audit a number of years ago, They Initially came to the house and went through the files etc, all seemed fine, then i got a letter to state that I owed 15k approx and i was flabbergasted and passed it on to an accountant who checked through everything, The Actual Revenue calculations were incorrect and my actual payment ended up being just under 4k.My accounts had been done and filed each year by a different accountant so i had thought I was fully compliant, My Advice would be to get the figures double checked to make sure everything is accurate

 

[Bronte]

This is very serious and your friend needs the advice of a good accountant who has experience with revenue audits. There is no way this couple should try and negotiate with revenue on their own. Paying for good advice is invaluable in this situation.

Also your friend should be very slow to get into more debt to settle with revenue.

And this thread should serve as a warning to those who are married to self employed people. Do not bury you head in the sand in relation to what is going on in the accounts. You risk your home and savings.

 

[MeathCommute]

My sympathies to your friend Worried Gail. The Revenue are very spiteful when they catch people out. No wonder people don't volunteer info until they are caught

 

[dereko1969]

My sympathies to your friend Worried Gail. The Revenue are very spiteful when they catch people out. No wonder people don't volunteer info until they are caught

Yes Revenue should just allow people who rob from the rest of us away with a little slap on the wrist. What an idiotic statement.

 

[MeathCommute]

Yes Revenue should just allow people who rob from the rest of us away with a little slap on the wrist. What an idiotic statement.

Doubling what you owe from 90k to 180k is draconian in the extreme

 

[Gekko]

The Revenue are very spiteful when they catch people out. No wonder people don't volunteer info until they are caught

Doubling what you owe from 90k to 180k is draconian in the extreme

I'm shocked at your analysis to be honest.

The qualifying disclosure and penalties regime is pretty fair in my view.

Sympathy for the guy's family aside, he's behaved like a clown and scammed us all. He's had the free use of €90k while everyone else was paying their share.

 

[laois1]

I dont think its draconian at all. The average paye earner over a ten year period would pay far more than that in income tax. I have no sympathy for the man involved. If he was self employed he was probably earning more than this and enjoying a lavish lifestyle. Hope the revenue get every penny they are due plus penalties and interest. Why should he seek to escape from his liabilities ? Am sure am not the only one who feels like this. If he has to rail in his current expenditure to make it up then so be it. There are others in worse positions through no fault of their own.

 

[mandelbrot]

Doubling what you owe from 90k to 180k is draconian in the extreme

Assuming you've read the OP you'll have seen exactly how this situation came about: "somehow through the excess of
celtic tiger good times he did not pay any income tax for 9 or 10 years (beyond belief but seemingly true)"

So it would appear this individual either filed no income tax returns, or filed income tax returns which grossly understated his circumstances, for the period of 9-10 years. Either one of which would be a prosecutable offence.

In the absence of some form of interest or penalty there is virtually no incentive to comply. So what do you think would be a fair way to deal with cases like that? It isn't anyone else's fault that this guy recklessly chose to ignore his responsibilities as a self employed person, and no doubt he enjoyed a nicer lifestyle as a result of his tax-free income for all those years.

The figures quoted would actually suggest a minimal level of penalties. If you consider that the interest rate on tax has been c.10 - 11% for the period in question and if you average 90k out over ten years from the late 90's to the late 00's, then 90k in unpaid tax over the period would easily amount to 160k - 170k when interest is added. (It is important to be aware that interest is statutory, the Revenue auditor has no leeway to not charge interest.)

This would suggest a penalty of somewhere between 10% - 30%, which if you look at the Code of Practice is at the lower end of the spectrum, particularly when you are dealing with a complete (and in all likelihood deliberate) failure to comply.